In a letter to the Consumer Financial Protection Bureau on Monday, consumer advocacy groups, higher education associations and others asked the bureau to require that colleges give prior approval before students borrow private loans, saying that the bureau has the power to require full certification by institutions. Right now, students "self-certify," meaning they sign off on a form that includes information about federal student loans and other forms of financial aid. Requiring colleges to certify that they are aware of the loans, the groups argued, would help ensure that students have already maxed out their federal loan options (many private loan borrowers have not), because federal loans usually offer lower interest rates and more flexible repayment options than private loans.
It is high school graduation time, and some columnists here in California and nationally, in platforms such as Forbes and U.S. News & World Report, seem to be heralding in the season by carrying articles questioning the value of a college education. They report record unemployment levels among recent college graduates as the rationale for pursuing a trade right out of high school rather than pursuing a college degree.
What such articles fail to report is that the best insurance against unemployment is a college degree. A review of Bureau of Labor Statistics data tracing educational attainment and unemployment for all recessions since 1981 suggests that adults with a college education were twice as likely to be employed as those who had earned only a high school diploma. The logical claim is that education is an investment that pays off.
One recent article in our local newspaper, "College enrollment down, experts cite low funding, high cost” quoted Richard Vedder, director of the Center for College Affordability and Productivity, who, on a recent trip encountered a parking lot attendant and bellman, both of whom had earned college degrees, certainly not required for their jobs. His take was that their "financial return on a college investment was negative."
Vedder drew the wrong conclusion. During recessions some college-educated adults are forced to take jobs beneath the levels for which they are professionally qualified. But one cannot make the assumption that this is true for the majority of college graduates. Recessions have the tendency to exert top-down pressure on the workforce, squeezing the less-educated and less-experienced out the bottom and into unemployment.
Within the last two weeks National Public Radio broadcast a Planet Money segment which contained sound bites from a trio of national figures – Ellen DeGeneres, Mayor Michael Bloomberg, and Oprah Winfrey - delivering commencement addresses. All ardently urged the new graduates seated before them to "follow their passions."
I would encourage them to do just that, follow their passions … but tempered with pragmatism. Also I would recommend that academic advisers, coupled with an institution’s career advisrs, coach students to select majors and possibly minors that offer the student the opportunity to pursue both passions and careers. That way students can have their cake and eat it, too.
"What if you don’t have a passion?" asked the exasperated student interviewed in NPR’s story. College is a wonderful place to develop or focus passion. Yet in this era of global economic stress, it is tempting for students to home in on a career early during their matriculation. Academic and career advisors should be vigilant in helping students and their parents, who are likely to be pressuring them into an early decision about an occupation, to avoid that trap.
All students need a healthy dose of learning opportunities that build the skills and capacities that will support them as their professional and personal lives unfold. That is one of the purposes of the liberal arts, that broad curriculum that pundits love to hate. We must be more effective in communicating the value of the liberal arts, not just in capabilities and perceptions, but in jobs and in dollars and sense.
Journalists and "experts" who say nay to the value of a college education are doing millions of high school and college students a gross disservice. They are robbing students of the best hope of developing and pursuing their passions with careers, each in a civically responsible way. Shortsighted reporting on this undermines the national security of the country by limiting its ability to develop the human capital on which the future of the United States depends.
Devorah Lieberman is president of the University of La Verne.
WASHINGTON -- Two dueling bills to avert an increase in the interest rate for new, subsidized federal student loans July 1 both failed to advance in the Senate on Thursday, illustrating the divide between the parties on how best to avoid the rate hike. A Republican bill to set the interest rate based on market rates failed, 40-57, although it was similar in many ways to President Obama's original solution in his 2014 budget request. A Democratic bill to freeze the rate for subsidized student loans at 3.4 percent for two years won a slim majority, 51-46, but didn't get the 60 votes needed for procedural reasons.
While the Obama administration has long favored a long-term solution based on market rates, Obama endorsed the Democratic bill for a short-term fix, saying averting the rate hike is the most important factor.
American Commercial Colleges, a for-profit higher education business in Texas, has agreed to pay the federal government up to $2.5 million to settle claims that it falsely certified that it was in compliance with certain requirements to receive federal student aid. A statement on the settlement from the Justice Department said that American Commercial Colleges had "orchestrated certain short-term private student loans" that the college repaid in order to appear to comply with the "90/10" rule. That rule requires that colleges seeking to participate in federal student aid programs receive at least 10 percent of their revenues from sources other than federal student aid. H. Grady Terrill, a lawyer for American Commercial Colleges, told The Lubbock Avalanche-Journal that he anticipated the institutions soon reapplying for authority to operate.
As some students continued to occupy the president's office at Cooper Union Wednesday, others took their protest to commencement, The New York Times reported. Students and alumni are angry at President Jamshed Bharucha over the decision to start charging tuition. Many graduates rose and turned their backs on the president when he spoke. The outside speaker was New York City Mayor Michael Bloomberg. In his remarks, Bloomberg did not take a stand on the decision of the university to deviate from the tuition-free system set up by the institution's founder Peter Cooper. But Bloomberg, citing his own history of giving to his alma mater (Johns Hopkins University), urged the new graduates to donate. "As frustrated and as angry as you may be about the school’s present situation, its future really is yours to determine," Bloomberg said. "When you walk out these doors today, do not leave the passion you have shown for this institution and its past and its future behind. Stay involved. Stay committed. And do what Peter Cooper did: Donate what you can."
Half of new college graduates are surprised by their levels of college debt, according to a new national poll of graduates by Fidelity. And 39 percent of new graduates said that they would have made some different choices had they fully understood the level of debt they were building up in college.
WASHINGTON -- The House of Representatives passed a bill Thursday that would create variable interest rates for student loans, but the measure is likely to stall since Senate Democrats strongly oppose it and President Obama has vowed a veto. Interest rates for federally subsidized Stafford loans will double to 6.8 percent on July 1 if Congress does not act, and both President Obama and Congressional Republicans had originally said they favored a long-term solution. But Congressional Democrats have opposed the House Republicans' plan, which would create interest rates based on 10-year Treasury bonds that would vary over the life of the loan, and want to sustain the 3.4 percent interest rate for another year or two so that Congress can consider the interest rate in the context of the broader renewal of the Higher Education Act.
The Obama administration had originally proposed a market-based solution of its own: as in the House Republican plan, rates would vary from year to year with interest rates in the broader economy. But, once a loan was issued, the interest rates would be fixed over the life of the loan. In a statement Thursday night, Education Secretary Arne Duncan suggested that the administration might support Democratic proposals to push the increase back. "Now is not the time to double interest rates on student loans, and we remain committed to working with Congress on a bipartisan approach to a long-term, fiscally sustainable solution that will help students and families afford higher education now and in the future," Duncan said. "Given the impending July 1 deadline, an extension that protects students against higher rates while Congress develops an alternative solution is another reasonable option."
The bill, H.R. 1911, passed by a vote of 221 to 198, largely along party lines.
A Dallas woman who has enrolled in and dropped out of 13 colleges since 2009 -- regularly applying for and keeping federal financial aid -- was indicted Tuesday on six counts of financial aid fraud, The Dallas Morning Newsreported. When some of the colleges asked her to return aid funds, she refused, and when one college cut off her aid, she filed an appeal.